12.36% Service Tax on NRI Remittances

In what would seem like a harebrained idea, govt. is going to charge 12.36% service tax on NRI remittances starting July 1. Rs1236 plus 3% education cess on service tax will be charged on every Rs 10,000 remitted. This is cheating of the first kind seen anywhere in the world. What right does GOI has to impose such an high service tax on remittances when much of this is earned outside of India?. All the more incentive for the people to wire money through Hawala channels and at the same time govt. will lose more foreign currency which will in time lead to rupee depreciation further. I think govt. is fullly not aware of the implications this will cause.

In his letter to the prime minister Wednesday, Tharoor pointed out that the decision to impose 12.36 per cent service tax on remittances to India by NRIs with effect from July 1 has generated tremendous resentment across Kerala.

"The imposition of the service tax will adversely affect millions of Keralities, especially those working in low-paid jobs in the Gulf region. This tax of Rs 1,236 for every Rs 10,000 sent home will be an unbearable burden on these ordinary people... and their dependent families at home," he said.

He called for keeping the decision in abeyance pending a more detailed examination of the "adverse implications" of the move.

Tharoor argued that this was a short-sighted measure which risked diverting remittances to hawala channels and tempting otherwise law-abiding citizens to indulge in undesirable malpractices.

"At a time when the country needs to attract inward remittances and investment, any measure which discourages these should not be contemplated," he said in the letter.

According to the latest study by the Centre for Development Studies, the total remittances in Kerala in 2011 was estimated at Rs 49,695 crore compared to Rs 43,288 crore in 2008.

The study also revealed that the number of Kerala emigrants living abroad in 2011 was estimated at 2.28 million, up from 2.19 million in 2008.

Dont you know, we need to tax the evil rich to pay the unfortunate poor with MNREGA, FSB, subsidides. We have to keep the rich poor divide small at all cost. What right does the NRI have in earning thousands of rupees, when a poor in India cant afford his daily dose of alcohol?

You evil capitalists are ruining India. Capitalists

If only the socialist pigs in the govt can be castrated. Bastards, they have not learned from 40+ years of the mysery they caused

This will reduce the remittance through proper channels and as Shashi Tharoor has rightfully stated Hawalas will do roaring business with the side benefits going to money laundering enterprises. I think our PM is a well known economist of India. Is it his idea to kill the goose laying golden eggs?

This is going to affect the poor and loer middle class NRIs more. The service tax is on each remitance transaction and the low end earners would be sending a transaction every month and loosing 12% of their money everytimg. Money that is required to run their household back home. Money that they had to go out of their country to earn.

@DareDevil, from the example that Shashi Tharoor mentioned, its on the entire remitance amount rather than on just the fee. This is a seriously wrong move if its goes ahead.

If ever applicable, this would be the most shameless move by the secularists to milk poor man's hard earned money! The difference here is the commoner has gone abroad to sustain his family!

Rather than cutting down fiscal deficit and it own extravagant expenses combined with 'The Plundering' spree of its secular components......This 'secular' govt has been increasing taxes and introducing new ones!

At times I remember the days of ABV and NDA, things were so much better than the plundering ruthless secularists ruling us! We do require strong non -secular GOI supported by non-secular non-minority owned media!

What service is is either received when a nri send's money home to a family member in india , What makes sense to me is a tax on farming land ,when sold for over a certain amount of money. I know black money coming from usa is causing land prices in Gujarat to sky rocket,nri are sending money to india to increase the family holding of land.

This is despite poor to average yield in crops's,black money is causing a bubble in land prices which keep locals from buying it.Why not address this issue if the UPA is for the common man.

What service is is either received when a nri send's money home to a family member in india , What makes sense to me is a tax on farming land ,when sold for over a certain amount of money. I know black money coming from usa is causing land prices in Gujarat to sky rocket,nri are sending money to india to increase the family holding of land.

This is despite poor to average yield in crops's,black money is causing a bubble in land prices which keep locals from buying it.Why not address this issue if the UPA is for the common man.

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UPA/Secularists/Corrupt people will never work for common people! They work to fill up their coffers; tell me how a dumbass like Robert Vadra has become a Billionaire in 10 years? Even TATA and Ambani's could not do this, but this low on intellect kabadiwalla did it?

Well as I said, Congress and rest of their cohorts are leading the nation to another 1991. This would dry up all the foreign remittances as NRIs would prefer calling their families abroad and investing them in those countries who give value worth of their taxes.